Guest post: How working from home could revitalise rust belt cities

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Michel Serafinelli, University of Essex

For years, we have been promised a work-from-home revolution, and it seems that the pandemic has finally brought it to pass. In April this year, at the height of the first wave of coronavirus, 47% of people in the UK were working from home, the vast majority of them doing so because of the pandemic. In a sense this is overdue: the work-from-home potential for UK employees is 32%; in France, Germany and Italy between 24% and 28%.

This structural transformation has the potential to at least partially undo another transformation from the previous century. With the decline of manufacturing in the United Kingdom after the 1970s, some cities – incuding Hull, Sheffield, Bradford and Stoke-on-Trent – entered a spiral of high unemployment and out-migration that has lasted to this day. This trend is echoed in other “rust belt” cities such as Saint-Etienne in France, Wuppertal in Germany and the American city of Detroit.

The rise of teleworking could end that spiral – if the right conditions are met.

The changing workplace

It’s unlikely that telework will end when the pandemic does – we will instead probably see workplaces encouraging a mix of in-office and home working. Some organisations may start asking workers to be in the office for only two to three days per week, while others may opt for a “conference model” (that is, a few consecutive days or a week per month for all employees).

This does not mean the death of big cities. London will probably stay attractive and innovative thanks to its very strong initial advantage. San Francisco and Seattle in US, Munich in Germany and Amsterdam in the Netherlands will all remain hubs for knowledge workers. Scholars believe face-to-face still rules when it comes to creativity, and such cities provide an environment that is conducive to innovation.

But rust belt areas are cheaper and can attract skilled workers to regularly spend more time there once the pandemic is over.

A busy street in Soho, London.
London will not lose its appeal. christo mitkov christov/Shutterstock

The job multiplier effect

How can formerly deprived cities thrive after the pandemic? To understand the potential for revitalisation of rust belt cities, we can invoke the job multiplier effect. This is where the presence of skilled workers helps create other jobs through increased demand for local goods and services. For example, after their day on Zoom (at home or in a local co-working space), skilled workers will want to go out. In this way they support a barista, a waiter, a chef and perhaps a taxi driver. Some will decide to renovate the house they live in, and ask a local architect. Once or twice a week they go for yoga. They may need a dogsitter when they travel.

This is not the only mechanism that could help with local revitalisation. Some of the people regularly spending more time in rust belt areas would be entrepreneurs, and we may see new business creation, as they seize new opportunities in industries such as culture, renewable energies, tourism, quality agro-food or handicraft.

In principle, therefore, our increased ability to work from home could lead to new growth opportunities.

Will it work?

But there are important caveats. Not all rust belt cities will be able take advantage of the post-pandemic world. After all, there were large differences in labour market performance after the 1970s, when the aggregate number of manufacturing jobs started to decline.

In the UK, both Middlesborough and Slough had 44% manufacturing employment in 1970. But their experience was vastly different in the three following decades, with Middlesborough employment declining by 13% per decade and Slough employment growing by 12% per decade. Places such as Norwich and Preston in the UK, Bergamo in Italy, and San Jose in the US were traditional manufacturing hubs that nonetheless performed well in the decades that followed the start of manufacturing decline in their countries.

To understand why we may see large differences across different cities again with the rise of working from home, we first have to think about differences in what economists call human capital endowments – this relates to the skills of the workforce in a particular place. For example, if locality A has a greater share of the workforce with a university degree than locality B, it has a higher human capital endowment and is more likely to recover from industrial decline.

The skill level of the workforce is important for the task of local reinvention – in our research team’s analysis of the reinvention potential for cities, we used the share of the workforce with a university degree as a proxy for this. To distribute these advantages across the board, scholars studying declining areas have called for measures aimed at boosting training and facilitating the assimilation of knowledge and innovation.

Another important challenge is the digital divide – the gap in speeds between areas with privileged access to the internet and the rest of the country. In the UK this is more than just a gap between urban and rural parts of the country – inner-city areas in London, Manchester, Liverpool and Birmingham are also left behind. A large reduction of this gap was important for job creation before COVID-19 – it should be a top priority now.

An overhead shot of a woman typing on a laptop at a table.
The UK’s digital divide affects cities too. marvent/Shutterstock

Local amenities also play a role. For skilled workers with family ties in a specific area, once they decide to regularly spend more time outside London, the choice of location is often pretty clear. For skilled workers without such ties, factors such as the cultural and recreational activities on offer in a new city become important, especially since they are used to a vibrant selection in London.

Overall, rust belt areas in Western economies face some opportunities for regeneration with teleworking, but there are also several important challenges. To maximise the potential for success, governments should consider measures that boost training, investment in high-speed broadband and improve transportation links between these cities and London.

These kinds of investments would help smaller cities such as Middlesborough, Hull and Stoke-on-Trent take advantage of the new opportunities presented by telework. Otherwise Manchester and, to some extent, other larger cities such as Birmingham and Liverpool could be the winners, among the rust belt, in the post-coronavirus work-from-home economy.

Michel Serafinelli, Lecturer in Economics, University of Essex

This article is republished from The Conversation under a Creative Commons license. Read the original article.


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The economic impacts of the coronavirus outbreak: what the experts are saying

While the coronavirus outbreak is first and foremost a public health emergency, the economic damage caused by the pandemic is also a huge concern. In recent weeks, think tanks and economists have been offering their thoughts on just how badly they believe the economy will be affected by Covid-19, and how long it might take to recover.

With each passing week it’s emerging that the economic impact of the coronavirus could be more severe than first thought. The International Monetary Fund (IMF) has warned that the shutdown of economic activity in the world’s major economies is likely to trigger a far more painful recession than the one following the financial crisis of 2008. The IMF now believes that the world is facing the worst economic downturn since the Great Depression of the 1930s.

In the UK, an equally gloomy prognosis has come from the Office for Budget Responsibility (OBR), the government’s fiscal watchdog. Its stark assessment of the possible economic impact of Covid-19 indicates that the UK economy could shrink by 35% and unemployment could rise to more than two million.

The regional picture

The economic impact of coronavirus is varying significantly across the country. Research by the Centre for Progressive Policy (CPP) has revealed that the decline in economic output is estimated to reach almost 50% in parts of the Midlands and the North West in the second quarter of this year. In terms of decline in Gross Value Added (GVA), Pendle in the North West is estimated to be the hardest hit local authority in the UK, followed closely by South Derbyshire and Corby in the East Midlands.

In Scotland, since the coronavirus outbreak began, the University of Strathclyde’s Fraser of Allander Institute (FAI) has been publishing regular updates about how business is being affected.

The FAI’s most recent survey of Scottish businesses  finds that, while all sectors of the Scottish economy have been severely affected by the crisis in terms of staffing levels, the accommodation and food services sector (which includes hotels, bars and restaurants) has experienced the harshest impacts, with 77% of businesses reducing staff numbers. In addition, 85% of businesses expect growth in the Scottish economy to be weak or very weak over the next 12 months.

On a more positive note, the FAI survey found that more than 95% of businesses which are planning to use the UK government’s  Coronavirus Job Retention Scheme believe it will be ‘very effective/effective’ in supporting their survival during the pandemic.

Business and employment support

The Job Retention Scheme is one of a series of measures introduced by the UK government aiming to limit the impact of the coronavirus, and ensure much of the economy is able to recover when the health crisis is over. While these actions have been widely welcomed, there have been calls for the UK to learn from more innovative measures adopted by other governments.

A report by the Policy Exchange think tank has highlighted Denmark’s wage subsidy, which is differently calibrated to the Job Retention scheme in the UK. While the Danish government is covering 75% of the salaries of employees paid on a monthly basis who would otherwise have been fired, for hourly workers the government will cover 90% of their wages, up to £3,162 per month. The Policy Exchange report notes that this assumes that workers paid by the hour won’t have the savings and support networks that generally better off salaried workers are likely to have.

Household challenges

The bigger economic picture is bad enough. But the real pain of an economic recession will be felt much closer to home. For individual households, social distancing measures aiming to contain the spread of coronavirus are already having significant impacts on spending habits. Research by the Institute of Fiscal Studies (IFS) has highlighted how these changes may be affecting people on different incomes.

The IFS suggests that richer households will be more resilient to falls in income since a considerable proportion of their spending goes on things that are currently not possible, such as eating out and holidays. But because lower-income households spend a higher share of their income on necessities, such as rent and food, the IFS suggests that they will be less resilient to any fall in income.

Exiting lockdown

In recent days, governments in France and Germany have set out plans for easing their lockdown restrictions, while Austria and Italy have already allowed some shops to open.  But the UK government has extended its lockdown to the beginning of May, and has not announced a clear exit strategy.

The uncertainty surrounding the trajectory of the coronavirus makes it exceptionally difficult to see when things might return to normal. But some analysts are becoming concerned about the harm that a prolonged lockdown might do.  A discussion paper published at the beginning of April highlighted some of these dangers:

“A long lockdown will wipe out large swathes of the economy. There will be a negative impact both financially and mentally on too many people. Already the lockdown has seen a surge in domestic violence. How to end the lockdown is key to helping restart the economy.”

The authors of the paper have put forward a strategy for ending the lockdown, suggesting that a phased traffic light approach (red, amber, green) would give everyone a clear sense of direction and address the economic, social and quality of life challenges posed by the lockdown.

After the virus

There is no clear agreement among economists on how the economy might fare once the health emergency has passed. Some economists forecast a sharp recovery, others suggest it will take two or more quarters, while still others forecast an initial boost in activity followed by another dip when the effects of unemployment and corporate bankruptcies start to filter through.

But there is a growing sense that the pandemic will have a fundamental impact on the economic and financial order. And in the UK, Paul Johnson, director of the IFS,  has suggested there will be an economic reckoning:

 “We will need a complete reappraisal of economic policy once the current economic dislocation is behind us. Tough decisions will have to be made which are likely to involve tax rises and higher debt for some time to come. The only other alternative would be another period of austerity on the spending side. That looks unlikely.”


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Spinout success: commercialising academic research

Research and teaching in UK universities is widely recognised to be among the best in the world.  In fact, the University of Oxford has topped the Times Higher Education World University Rankings 2020 for the fourth year in a row.

However, in November last year, venture capital firm Octopus Ventures published a new measure of UK universities’ success – the Entrepreneurial Impact Ranking.

Instead of focusing on traditional measures of success, such as research, teaching and citation impact, Octopus Ventures’ new index measures UK universities’ effectiveness at translating this research into commercial success via the creation of “quality, investor-ready spinout companies”.

The results are a little surprising – with Queen’s University Belfast reaching the top spot, ahead of big players such as the University of Cambridge and the University of Oxford.

In this blog post, we consider these findings in more detail, and discuss the potential to further capitalise on the potential of spinouts in the UK, and the key factors that underpin their success.

A brief history of spinouts

A university spinout has been defined by Octopus Ventures asa registered company set up to exploit intellectual property (IP) that has originated from within a university”.

In other words, it is a company that has been established based on ideas derived from a university’s research.  Often, former or current researchers are directly involved in the management team, and start-up funding is provided by the university (or one of its connected venture funds).

UK universities have been allowed to commercialise the results of their research since the mid-1980s. Between 2003 and 2018, approximately 3000 IP-based spinouts were created by UK universities.

Since 2010, there has been a notable increase in investment into university spinouts – both in terms of the number of deals achieved and the amount of money invested in university spinouts, from both private and public investment sources.

High rates of success

There is good reason for this increased investment – the survival rates of spinouts are high compared to other types of start up enterprise.  Research published in 2018 by law firm Anderson Law found that nine out of ten spinouts survive beyond five years.  By way of comparison, only two out of ten new enterprises survive beyond five years in the wider start-up environment.

Indeed, many spinouts not only survive, but thrive.  The UK has produced a large number of very successful spinouts – for example, Oxford Nanopore Technologies, a University of Oxford spin-out company that has gone on to reach a £1.5 billion valuation.  ARM Holdings is another example – a designer of smartphone chips, established by the University of Cambridge, and acquired by Japanese firm Softbank for £24 billion in 2018.

Unrealised opportunities

However, while the UK has seen a number of high profile spinout success stories, Octopus Ventures, argue that there is yet more untapped potential to be realised:

The UK has produced a host of successful university spinouts, but there are many unrealised opportunities that have been left in labs or got lost on their funding journey. These could be worth trillions of pounds to the UK economy.”

This potential is perhaps best illustrated by looking at the unrivalled success of many universities in the United States.  Take, for example, Massachusetts Institute of Technology (MIT).  MIT has been the genesis for around 26,000 spinout companies, with a combined annual company turnover of US$2 trillion.  This is a huge amount from one university – and is equivalent to around 65% of the UK’s entire annual GDP!  The resultant spinouts have also created in the region of 3.3 million jobs. MIT clearly illustrates the huge potential that exists to capitalise on universities’ research.

Index results

Back in the UK, this massive potential has yet to be realised.  Indeed, one of the key aims of the new Entrepreneurial Impact Ranking is to identify where this potential exists, and which universities are making notable progress towards capitalising on it.

The key data points included are:

  • total funding per university;
  • total spinouts created per university;
  • total disclosures per university;
  • total patents per university;
  • total sales from spinouts per university.

An interesting element of the index is that it is also adjusted to account for the total funding that a university receives.  This means that it is not dominated by Russell Group universities simply on the basis of them receiving the most funding.

Indeed, Queen’s University Belfast was ranked first – putting it ahead of both the University of Cambridge (2nd place) and the University of Oxford (9th place) in terms of its production of spinout companies and successful exits, relative to the total funding received.

Queen’s University Belfast, through QUBIS Ltd, the university’s commercialisation arm, has had a number of spinout successes, including KainosAndor Technology, and Fusion Antibodies, all of which have been listed on the London Stock Exchange.

In Scotland, the highest ranking university was the University of Dundee (6th), which has had a number of successful spinouts, including Platinum Informatics, which specialises in the provision of software to analyse ‘big data’.

What makes a successful spinout company?

As well as identifying the most effective universities in terms of spinouts, the Octopus Ventures report also looks at the shared success factors that have contributed to their effectiveness.

There are three key factors:

  • Funding – Access to early funding is essential to success. Universities that ranked highly in the index were ones that raised funds to help get ideas off the drawing board. As Simon King, a partner in Octopus Ventures states: “Universities that enable early-stage proof of concepts and prototyping by making early-stage funds available, either internally through their own funds or through collaborative schemes with other funds are more successful at creating spinouts.  That’s a key takeaway.”
  • Talent – the issue of talent is considered a ‘consistently challenging’ issue for spinouts.  There is a huge demand for the right skills, and spinouts are often viewed as being high-risk propositions compared to more established enterprises.  Other challenges include a lack of academics’ understanding of the business world, and limited incentives for them to engage in the commercial world in light of the pressure to ‘publish or perish’.
  • Collaboration – As well as university-industry collaboration, collaboration between different universities was a key factor in the creation of successful spinouts. Collaboration helps to increase both scale and capacity, whilst also helping to attract and retain top talent.

Future support for spinouts

Measuring the relative effectiveness of UK universities’ ability to commercialise their research provides a number of signposts for the future in regards to how best to support and further develop this potential.

This is increasingly important given the economic uncertainties surrounding Brexit and the availability of a number of European funding streams once the UK leaves the European Union.

The UK’s Industrial Strategy places a clear emphasis on academic entrepreneurialism as a driver of economic growth.  And in 2018, the UK Government launched the £100m Connecting Capability Fund to support university collaboration in research commercialisation.

Commercialising academic research is far more complex, risky and expensive than establishing a typical start-up.  But their potential contribution to the economy, and wider society, is huge.


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Shared Prosperity Fund – greater productivity and inclusivity for Scottish cities?

new bridge glasgow

There are many questions surrounding the UK’s departure from the European Union, not least on the future of funding.

In Scotland’s regions and cities, EU Structural Funds have provided significant additional funding to support economic development for many years. The current structural funds programme is worth about €10.7 billion to the United Kingdom and up to €872 million to Scotland across the seven-year budget period which ends in 2020. The Funds were originally created to help rebalance regional social and economic disparities. With regional inequality a dominant feature of the current economic landscape, and the potential of Brexit to further exacerbate this inequality, continued investment to address this is vital.

The UK Government has made no commitment to continue with the EU Structural Fund approach following exit from the EU and has instead proposed to introduce a domestic successor arrangement – the Shared Prosperity Fund (SPF). The objective of the SPF is to “tackle inequalities between communities by raising productivity, especially in those parts of our country whose economies are furthest behind.” This objective is widely welcomed. However, as yet there has been no formal consultation on the new Fund and no detail on how it will operate.

Nevertheless, it had been suggested in recent research from the Core Cities Group on Scottish cities that despite the significant contribution from Structural Funds over the years, the proposed SPF could be an opportunity for greater productivity and inclusivity.

Success of EU Structural Funding

The two major EU Structural Funds utilised in Scotland are the European Social Fund (ESF), focusing on skills and jobs, and the European Regional Development Fund (ERDF), which focuses on correcting regional imbalances.

Over £134m per annum is being invested in economic development in Scotland through these funds over the current programming period, which is supported by a significant amount of match funding, largely from the public sector. According to the Scottish Government, the total funding will be around €1.9 billion.

The Scottish Cities – the collaboration of Scotland’s seven cities (Aberdeen, Dundee, Edinburgh, Glasgow, Inverness Perth, and Stirling) – and city regions have already successfully invested in each of the four Scottish Economic Strategy priorities (innovation, investment, inclusive growth and internationalisation) and the UK Industrial Strategy’s five foundations of productivity (ideas, people, infrastructure, business environment and place).

Some examples of projects include:

Research suggests that the ending of such funding poses a risk to organisations and the positive economic impact gained, as illustrated by reductions in funding in other areas of the UK.

Limitations

Despite the successes that have been achieved through the use of Structural Funds, the approach is not without its limitations. As argued by the Core Cities report, the approach to managing, overseeing and using the funding has become more bureaucratic and cumbersome. Particular issues highlighted include:

  • increasing centralisation of funding and decision-making;
  • the requirement to provide match-funding at an individual project level becoming increasingly problematic due to public sector budget cuts;
  • monitoring, compliance and audit requirements have become increasingly onerous;
  • in the current programme period, the role of the Managing Authority has become more transactional, with little engagement at the project development stage;
  • eligibility rules restrict what can be funded, with some important elements of economic development no longer able to be supported e.g. new commercial premises, transport infrastructure, which can limit the benefits from other Structural Fund investment (such as business growth and employment creation on strategic sites);
  • the system does not encourage innovation, with high levels of risk aversion amongst programme managers, and a high degree of risk for project sponsors if project delivery does not proceed as planned – a particular issue for projects working with the most disadvantaged groups and those with complex needs.

The report argues that these factors have had the effect of limiting the achievements of the Funds, such as preventing some organisations from applying for funding, which in turn has made others wary about applying. This has led to projects being designed to meet the funding criteria rather than maximising benefits, resulting in too much time and effort on administrative activities rather than those which will have an impact on the economy.

As such, it is suggested that the introduction of the SPF affords an opportunity to change this.

Opportunity for change

According to the report, there is an opportunity to move away from the limitations of the Structural Fund programme approach to more effective arrangements that will increase productivity and contribute to a more inclusive economy. There is scope to increase the funding available through the SPF, reduce bureaucracy and become more responsive to local need.

It is suggested that there is potential for SPF investment in the Scottish Cities to deliver an economic dividend of up to £9bn as productivity increases, producing higher wages at all levels in the workforce, and contributing to a more inclusive economy overall.

Given that Scotland’s performance on some of the key economic indicators is likely to be taken into account when allocating SPF – GVA per job and per hour worked, employment rate, deprivation levels – the report also contends that there is a case for a greater share of the SPF for Scottish Cities. It argues that significant SPF investment in these areas “…will increase competitiveness and tackle inequality, as set out in Scotland’s Economic Strategy, as well as contributing towards the objectives of the UK’s Industrial Strategy, raising productivity and reducing inequalities between communities”.

The report warns that “Scotland will not make significant progress towards a more inclusive economy and society without addressing the deprivation challenges in the Scottish Cities.”

It is recommended that:

  • the SPF should use a transparent, needs-based allocation system;
  • the SPF budget should not be determined by previous levels of Structural Funds, and should be significantly increased; and
  • the Scottish Cities must be closely involved in the design of the SPF.

Final thoughts

There appears to be wide consensus for providing a replacement for EU Structural funding. Most organisations that have commented on the proposed SPF also agree that the level of funding should at least be maintained at its current level.

The concerns in Scotland, and indeed the other devolved legislatures, is the impact the SPF might have in devolved decision making powers currently exercised under EU Structural Funding.

The Scottish Cities have made clear their views on the proposed SPF and the Scottish Government has also launched its own consultation on how the Fund might work for Scotland.

Only time will tell whether the UK Government will take these comments on board, and indeed whether the opportunity for change will be realised at all.


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Diversity and precarity: a conference on Scotland’s places of creative production

It might come as a surprise to learn that Scotland’s creative industries make up the country’s second biggest growth sector, after energy. But as well as making significant economic contributions, the creative sector is important on its own terms, with practitioners deploying their imagination, skills and expertise in a wide variety of sub sectors, from architecture and advertising to design and music.

Last month, The Glasgow School of Art (GSA) hosted a conference focusing on the ambitions of Scotland’s creative community. The organisers chose the perfect setting for the conference: for the past 20 years The Lighthouse in Glasgow has been a beacon for Scotland’s creative industries. As well as serving as Scotland’s architecture and design centre, the building has a direct connection to one of Glasgow’s cultural heroes. Designed in 1895 for the Glasgow Herald, The Lighthouse was the first public commission for Charles Rennie Mackintosh.

Scotland’s creative community has a lot to be proud of, but as well as acknowledging success stories in television, computer games and the visual arts, the conference also addressed the shadows that threaten to undermine Scotland’s creative sector.

Defining design and the challenges of precarity

One of these issues was raised by Janice Kirkpatrick, founding director of Graven, one of Scotland’s most successful design studios. Janice observed that the creative community’s difficulty in defining creativity has made it hard to communicate its work to the wider world. This is important, especially when trying to attract young people into the sector. She noted that in England between 2000 and 2018 there was a 79% fall in the number of people studying design. The situation in Scotland isn’t quite as bleak, with a 16% increase in design students. But Janice argued that there is a need to introduce children to art and design at a much earlier stage in their lives so that they can regard the creative sector as a serious career option.

Katrina Brown, founding director of The Common Guild, agreed that schools have a vital role to play in nurturing an affinity for and awareness of the arts. She observed that other countries have adopted a different approach, noting that a friend living in France had complained that their daughter’s school organised visits to art galleries just once a month.

The Common Guild is a dynamic visual arts organisation in Glasgow, and Katrina referenced her experiences to highlight the precarity of the sector. The arts have not been immune to the impact of austerity following the global economic crisis. Galleries have closed, programming has been reduced, and opportunities for artists, invigilators, educators and technicians have shrunk. This matters, Katrina argued, not only because the arts have such positive economic effects, but they also enrich our health, wellbeing and quality of life.

Despite the harsh economic climate, many public bodies recognise the value of the arts, and Katrina offered the example of Dundee Contemporary Arts (DCA), which has become a world class centre for contemporary art and culture. The University of Dundee has demonstrated the importance of supporting the cultural life of the city by investing in DCA, which supports individuals in their artistic endeavours, but also provides them with an income through jobs in the centre’s café and cinema.

Place makers: Glasgow’s Meanwhile Spaces

The conference’s title – Places of Creative Production – took on a special resonance during a presentation by Richard Watson, Commercial Lead at City Property Glasgow, a subsidiary of Glasgow City Council. Like many UK cities, Glasgow’s city centre has been struggling to cope with the impact of online shopping and out-of-town retail centres. Closures have hit the city harder than any other in Scotland, with an alarming rise in the number of vacant properties. In response to these challenges, City Property Glasgow has been working with the council and other agencies to create ‘Meanwhile Spaces’ from empty shops in the city’s High Street and Saltmarket. After being made structurally safe and ready for new tenants, a new leasing strategy was developed, offering the properties for one year, rent-free (all other service, utility and business rates charges still apply).

Since June of this year, the first Meanwhile Space tenants have been moving in, and many of these are members of the Scotland’s creative community, including:

SOGO: a Scottish based bi-annual lifestyle and arts magazine, which promotes and provides a platform for Scottish creative industries and communities.

WASPS: the UK’s largest non-profit studio provider for artists, which will use a Meanwhile Space to support activities in which creators can prosper.

SALTSPACE: a new co-op launched by students and graduates from Glasgow School of Art to support young creatives in their transition from art school into professional practice.

Although the project is still at an early stage, Richard explained that the response of tenants and local residents has been positive, and City Property Glasgow is already working on plans to create Meanwhile Spaces in other parts of the city, and to develop longer-term spaces.

The conference heard a variety of voices and experiences, giving participants the opportunity to learn about a rich diversity of creative activities in Scotland and beyond:

  • Professor Andrew Brewerton from Plymouth College of Art, described the establishment of a free school specialising in the creative arts;
  • Video games artist and lecturer Andrew Macdonald compared his experience of working in Sweden’s games industry with the games sector in Scotland;
  • Writer and broadcaster Stuart Cosgrove explained the approach taken by the Glasgow team in forming a successful bid to become one of Channel 4’s creative hubs.

Forward thinking

Closing the conference, Professor Irene McAra-McWilliam, Director of The Glasgow School of Art, said that the GSA would be happy to organise further events that might build on the ideas arising from the day’s conversations. And she reminded participants that although Scotland’s creative community faces significant challenges, it also has the skills, experience and passion needed to meet them.


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‘Digital prescribing’ – could tech provide the solution to loneliness in older people?

Notruf und Hilfe für Rentner und Kranke

The number of over-50s experiencing loneliness could reach two million by 2026. This compares to around 1.4 million in 2016/7 – a 49% increase in 10 years.

It has also been estimated that around 1.5 million people aged 50 and over are ‘chronically lonely.’

With an ageing population and increasing life expectancy, it would seem likely that loneliness among older people is set to continue; unless something significant is done. According to Age UK, tackling loneliness requires more than social activities. A new report from Vodafone suggests technology could be the answer.

Impact

The impact of loneliness in older people can be immense, not only for the older people themselves but for those around them. It can also put strain on the NHS, employers and organisations providing support to people who are lonely; and have a negative impact on growth and living standards.

Research has suggested that those experiencing social isolation and loneliness are at increased risk of developing health conditions such as dementia and depression, as well as increased risk of mortality. The damaging health effect of loneliness has been shown to be comparable to smoking 15 cigarettes a day. Older people who are lonely are therefore more likely to use health services than those who are never lonely.

The economic impact is also significant. It has been estimated that increases in service usage create a cost to the public sector of an average £12,000 per person over the medium term (15 years). Vodafone’s report suggests that loneliness has a £1 billion a year impact on public services. It has also been found to cost employers £2.5 billion per year.

How tech can ease the burden

According to Vodafone, “new technologies are a key part of the solution” alongside more traditional public and community services. Two key routes through which technology can be used to reduce loneliness are highlighted:

  • by supporting older people to remain independent in their home and community; and
  • maintaining and building networks and contacts.

From wearable devices and touchscreens to personal robots that act as the eyes, ears and voice of people unable to present physically, these are all highlighted as viable and positive uses of tech to ease the burden of loneliness. And there are already a number of examples of innovative use of technology that can benefit older people.

1024px-AV1

No Isolation AV1 robot. Image by Mats Hartvig Abrahamsen, via CC BY-SA 4.0

Good practice examples

One such example is Vodafone’s smart wearable wristband, the V-SOS Band, which supports independent living while also increasing the wearer’s safety. It can directly alert family members via their phone if the wearer needs help. It also uses fall detection technology so that families can be alerted automatically if the wearer falls either in the home or when they are out.

Kraydel is another example. Its smart TV-top hub links elderly people to their carers or family members, through their TV screens, helping people be more independent and remain in their own homes for longer as well as helping them be more socially connected. It provides for user-friendly video calling via the TV and can help people return home from hospital earlier. Via connection to the cloud, the device interprets the data it receives to build up a picture of the user’s daily activities, health and wellbeing. It issues medicine and diary reminders, and alerts caregivers if it sees something amiss, or identifies potential risk.

Although aimed at children, No Isolation’s AV1 – a smart robot designed to reduce the risks of children and young adults with long-term illness becoming socially isolated – demonstrates the positive impact innovative technology can have on social isolation and loneliness. The robot avatar, with its 360 degree camera, acts as the child’s eyes, ears and voice in the classroom or at other events, keeping children closely involved with school and in touch with their friends.

Of course, loneliness is particularly prevalent among people who don’t use smart technology such as smart phones and tablets, one of the reasons cited by Kraydel for using the TV – probably the most familiar and widely used screen globally. This issue also led No Isolation to develop KOMP, a communication device for seniors that requires no prior digital skills. It enables users to receive photos, messages and video calls from their children and grandchildren, operated by one single button.

Another new project recently launched in Sweden – considered one of the world’s loneliest countries – uses a unique conversational artificial intelligence which enables older people to capture life stories for future generations while providing companionship. Memory Lane works with Google Voice Assistant and is able to hold meaningful conversations in as human a way as possible. A pilot test showed that the software “instantly sparked intimate conversations” and led to stories that hadn’t been told before.

Final thoughts

With a significant number of older people lacking confidence in their ability to use technology for essential online activities, support for digital skills is obviously still important. In response to this issue, Vodafone has launched free masterclasses across the UK, as part of a programme called TechConnect.

Many of the above innovative examples bypass the traditional barriers to realising the potential of technology in reducing loneliness as most:

  • don’t rely on older people engaging directly with the technology; and
  • are based on mobile technology that can be constantly connected, whether inside or outside the home.

However, there is still the issue of awareness of such technologies and their accessibility to older people. The Vodafone report suggests that access could be improved through social and digital prescribing and revitalising support for independent living, and calls for a challenge fund to support innovation. It is suggested that these innovative ideas are just the start and that combined action is needed from across all levels of government, business and community groups, amongst others.

Perhaps if such action is taken to address existing barriers, we will see a reverse in the loneliness trend over the next 10 years.


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Housing wealth matters

Houses-on-coins-by-Images-Money

With the widening gap between the richest and poorest across different measures of inequality, there is growing awareness that income is not the only factor that impacts living standards. This has led to increasing interest in the distribution of wealth. While wealth can take various forms, the most visible way households accrue and store substantial amounts of wealth is through property ownership.

Property wealth in Scotland has increased ten-fold over the last 50 years – driven primarily by rising house prices, but also by the increasing number of properties and transfer of public housing into the private sector. However, this wealth is not distributed equally. In its recent examination of the scale and distribution of housing wealth in Scotland over time, the Resolution Foundation highlighted the marked rise in housing wealth inequality over the last decade, which is now twice as high as income inequality.

Why?

The new report shows that the growing inequality in housing wealth is in large part due to the fact that while very few families in Scotland currently have no form of income, over one in three Scottish households hold no property wealth at all and those in the top income decile own around 30% of the country’s property wealth.

Additional property ownership has also increased in recent years, adding to the level of inequality. The biggest wealth gaps were found to be in Scotland’s largest cities – Aberdeen, Dundee, Edinburgh and Glasgow – where low rates of home ownership are coupled with ownership of multiple properties, concentrating housing wealth in fewer households’ hands.

In addition, the last decade has seen many people struggle to get a foot on the housing ladder and today’s young people hold less housing wealth than their predecessors. Location was also found to have an impact as house prices can differ greatly by local authority, although these variations have reduced in recent years.

As a result, levels of housing wealth inequality are now nearing the same levels as those in England and Wales, although rates of homeownership remain higher in Scotland than elsewhere in the UK.

With more people now having some form of income than ever before, it is perhaps reasonable to ask why housing wealth is so important.

The Foundation’s report highlights that owning property has value over and above general wealth effects in that it can also provide a secure home; a source of income; and greater financial security in later life. Indeed, the UK Collaborative Centre for Housing Evidence (CaCHE) and Policy Scotland’s evidence review, which complemented the Foundation’s analysis, also highlights why housing wealth matters, citing many economic, health and social impacts.

Why housing wealth matters

While it has been previously argued that housing wealth inequalities are of little significance in terms of macroeconomic impact and can therefore be disregarded, there is now a growing body of evidence suggesting that in fact these inequalities do matter. The evidence review notes that:

  • housing assets are of growing importance encouraging household spending and were implicated in the global financial crisis;
  • access to home ownership is increasingly reliant on parental property wealth with negative implications for social mobility;
  • housing wealth is cumulative: e.g. buy-to-let has increased dramatically in Scotland over the last 20 years, often facilitated by the re-mortgaging of existing property by owners;
  • rising house price and wealth effects reduces productivity growth; and
  • different rates of house price change create inequalities across UK regions.

This is not only the case in Scotland and across the UK; across Europe housing wealth inequality has been shown to exacerbate socio-economic differences by segregating households based on income levels.

In relation to health and wellbeing, housing wealth can be a double-edged sword. A rise in house prices can lead to increased physical health of owners but decreased physical and mental health of renters.

Of course, historically, housing wealth has been seen to contribute to reduced wealth inequalities due to increased home ownership, however, there is now also an emerging concern that high house prices and rents may impair labour supply and productivity.

HWI

Main elements of wealth inequality processes within the housing system (CaCHE, 2019)

It is clear that income is not the only important factor in inequalities. This is illustrated by recent figures on child poverty and in-work poverty, which show that despite recent record levels of employment, two thirds of children living in poverty come from working households and more than half the people living in relative poverty in 2017/18 (53%) lived in households where at least one adult was in paid employment.

The Resolution Foundation notes that while the scale and distribution of housing wealth has changed dramatically over the past 50 years, wealth taxation has not.

Indeed, it has been recently argued that policy is widening the housing wealth divide and that the local supply of housing needs to be realigned with local housing demand if this is to be rectified.

Way forward

The research suggests that a number of actions could be taken to address the growing housing wealth inequalities in Scotland:

  • Firstly, support for sustainable home ownership, especially for those on lower incomes or in the younger age bracket is highlighted as one obvious response, although it notes that policies such as Help to Buy risk stimulating demand to the point that house prices are driven up. As a result, it is suggested that policy action to lessen the demand for holding additional properties would be a more sensible strategy.
  • Second, it is argued that there is a strong case for substantial reform in the area of the property taxation to address the current mismatch between the value of housing wealth and taxation.
  • Third, it is suggested that the Scottish Government could give consideration as to how the benefits of holding housing wealth can be provided to those who are unlikely to ever be able to support home ownership, with more efficient taxing of housing wealth. In addition, the government could also build on their recent reforms which have provided tenants with greater security of tenure and more predictable rent increases, and look to provide more support to low-income families via further supplements to benefits.

With the current system of council tax described as “highly regressive”, “inequitable” and “inefficient”, the research calls for much needed reform.

Both reports acknowledge that radical change is a political challenge but while the Resolution Foundation’s report states the case for action is clear, the evidence review advises caution, suggesting that a more equal housing system is a long-term aspiration rather than something practical and realisable in the short to medium term.


If you enjoyed reading this, you may also be interested in some of our previous posts on housing topics.

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A rising tide: the growing importance of the blue economy

Wild Surf

There has been much focus on the green economy in recent times as the international community attempts to address the current ‘climate emergency’. According to the United Nations (UN), “an inclusive green economy is one that improves human well-being and builds social equity while reducing environmental risks and scarcities.” Over the past decade, many governments have highlighted the green economy as a strategic priority, and since the Intergovernmental Panel on Climate Change (IPCC) published its special report on the impacts of global warming of 1.5 °C in 2018, action has been stepped up across the globe.

However, green economy strategies tend to focus on the sectors of energy, transport, agriculture and forestry, which leaves out an important part of the world’s environment – the oceans. It has been argued that “a worldwide transition to a low-carbon, resource-efficient green economy will not be possible unless the seas and oceans are a key part of these urgently needed transformations”.

Perhaps unsurprisingly then, a new buzzword in the international sustainability agenda is gaining momentum – the ‘blue economy’. Since the turn of the 21st Century, there has been an increasing commitment to growing the blue economy but what exactly is it and why is it important?

What is the blue economy?

Similarly to the green economy, there is no internationally agreed definition of the blue economy. Its origins stem from the Rio+20 outcomes whereby member states of the UN pledged to ‘protect, and restore, the health, productivity and resilience of oceans and marine ecosystems, to maintain their biodiversity, enabling their conservation and sustainable use for present and future generations.’

It is further explained through the UN General Assembly support for Sustainable Development Goal 14: ‘Conserve and sustainably use the oceans, seas and marine resources for sustainable development’ as set out in the UN’s 2030 agenda for sustainable development.

Various definitions have been used by different agencies.

According to the World Bank, the blue economy is the “sustainable use of ocean resources for economic growth, improved livelihoods and jobs, and ocean ecosystem health.”

Conservation International has suggested that, “at its simplest, ‘blue economy’ refers to the range of economic uses of ocean and coastal resources — such as energy, shipping, fisheries, aquaculture, mining, and tourism. It also includes economic benefits that may not be marketed, such as carbon storage, coastal protection, cultural values and biodiversity.”

Like the green economy, the blue economy model aims for improvement of human wellbeing and social equity, while significantly reducing environmental risks and ecological scarcities.

Why the blue economy is so important?

Clearly, ocean health is vital to the blue economy. With over 70% of the world’s surface covered by ocean, almost half of the world’s population living in close proximity to the sea, the majority of all large cities being located along the coast and 90% of global economic trade travelling by sea, it is not difficult to see why the ocean and its resources are seen as increasingly important for both sustainable and economic development.

It is also a source of food, jobs and water, and contributes to the protection of the environment by absorbing carbon dioxide emissions. It has been estimated that the global blue economy has an annual turnover of between US$3 and 6 trillion and is expected to double by 2030. It is also estimated that fisheries and aquaculture contribute $US100 billion annually and about 260 million jobs to the global economy. In addition, over 3 billion people around the world, mostly from developing countries, rely on the world’s oceans and seas for their livelihood.

It is therefore not surprising that ocean pollution and the threat to marine resources have ascended the sustainability agenda in recent years, attracting increasing global attention and high-profile interest.

Sir David Attenborough’s popular Blue Planet II series highlighted the devastating impact pollution is having on the world’s oceans. It led to drastic behaviour change – 88% of people who watched the programme reported having changed their behaviour as a result, with half saying they had “drastically changed” their behaviour, and half saying they had “somewhat changed” it.

The recently heightened concerns over climate change have also highlighted the importance of the blue economy. The IPCC report warned that coral reefs would decline by 70-90% with global warming of 1.5°C, whereas virtually all (> 99%) would be lost with 2ºC.

Momentum building

Governments and organisations from across the world have been taking action to address the climate emergency with many strengthening commitments to growing the blue economy in particular.

The first ever global conference on the sustainable blue economy was held last year. It concluded with hundreds of pledges to advance a sustainable blue economy, including 62 commitments related to: marine protection; plastics and waste management; maritime safety and security; fisheries development; financing; infrastructure; biodiversity and climate change; technical assistance and capacity building; private sector support; and partnerships.

A new High Level Panel for a Sustainable Ocean Economy was also established in September, the first time serving heads of government have joined forces on a global pact to protect the world’s oceans.

The UN’s Decade for Ocean Science (2021-2030) will also soon be upon us and the World Trade Organisation has been tasked with ending harmful fisheries subsidies by 2020. New approaches are also helping countries value their small-scale fisheries. Scotland’s economic action plan, for example, makes a specific commitment to grow the blue economy which includes a new, world-leading approach to fisheries management with a focus on inclusive economic growth.

Way forward

The increasing awareness of the blue economy and the threats it currently faces provide an opportunity to change things for the better. As the global conference on the sustainable blue economy suggested, a sustainable blue economy strategy needs to be people-centric with ocean-centric investments. If momentum keeps building towards growing the blue economy across the globe, perhaps this will go some way to mitigating the global climate emergency bringing benefits for all.


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How can the UK Government support our rural entrepreneurs?

Rural Wales, house by a river

By Steven McGinty

Rural businesses play a significant role in the UK economy. Yet, policymakers often overlook their contribution and, as such, have failed to realise the economic opportunities in many of our rural areas.

Last year, University of Essex researcher Anupriya Misra presented an insightful webinar (register to hear a recording of the webinar) outlining some of the key challenges facing rural entrepreneurs, as well as the likely drivers of growth.

The make-up of the rural economy

Research by the House of Lords Library shows that the rural economy accounts for approximately 20% of England’s total economic activity, an estimated £229 billion.

Unsurprisingly, one of the key differences between city and rural economies is the size of the agriculture, forestry, and fishing sectors. In England, they amount to 2% of the Gross Value Added (GVA) of the rural economy. However, in rural areas classed as ‘sparsely populated’ this figure significantly increases, with these industries accounting for 32% of registered local businesses.

In Scotland and Northern Ireland, agriculture, forestry, and fishing play a more prominent role in the rural economy. In Scotland, 13 out of its 32 local authorities have more than 50% of their population living in rural areas, with these councils contributing 20.6% of Scotland’s GVA. In Northern Ireland, 25% of VAT registered businesses are involved in agriculture, forestry, and fishing, and outside of Belfast, it’s the largest industry in each local authority area.

The challenges for rural entrepreneurs

Many rural businesses have a strong entrepreneurial spirit, and the products they sell make up a significant proportion of UK exports. For example, 25% of Britain’s goods exporters are registered in rural areas. Nevertheless, these rural entrepreneurs can face barriers their counterparts living in cities are far less likely to experience. This includes:

  • Slow broadband – Online rural businesses can be particularly affected by slow broadband speeds. In addition, businesses involved in the tourism industry are affected, as free wi-fi is becoming an increasingly important part of the visitor experience.
  • Skills shortages – Rural businesses in sparsely populated areas can struggle to recruit the right staff, and their existing staff can experience challenges accessing training and development opportunities.
  • Poor transport infrastructure – Poor infrastructure can make it challenging for rural businesses to recruit, as well as connect to suppliers and customers in larger urban centres.
  • Difficulty accessing finance – Lower land values in rural areas can also limit a business’s ability to provide collateral for loans.

Why do some rural areas do better than others?

An interesting question raised by webinar presenter Anupriya Misra is why do some rural areas outperform others? In her view, a mixture of supply and demand factors impact on an area’s economic performance. For instance, having access to high skilled labour, good transport links to cities, beneficial planning laws, and business support are very important for supporting rural economic growth.

Additionally, rural areas which have a wealthy local population or have products with strong global demand are also likely to be high performing.

Business advice and networking

A key theme to emerge from the webinar was the important role business advice and networking plays for rural entrepreneurs. Fledgling rural businesses will often need a range of support, including help to develop their business management skills (such as basic accountancy skills), legal advice, as well as guidance on grant writing and the funding opportunities available to them.

Entrepreneurs looking to grow their business, will need other forms of support, from help to develop an online marketing strategy to advice on providing great customer service. Informal networks, and opportunities to connect with other business owners, can also be an invaluable resource.

In 2012, the Department for Environment, Food and Rural Affairs (Defra) set up the Rural Growth Network (RGN) Pilot Initiative to help rural areas overcome the barriers they faced.  This included projects in Cumbria, Heart of the South West (HotSW), North East, Swindon and Wiltshire, and Warwickshire. In practice, this involved creating a network of ‘enterprise hubs’, offering rural businesses a mix of premises, business, and infrastructure support.

An evaluation of the initiative highlighted that introducing enterprise hubs brought several benefits to rural entrepreneurs. 70% of start-up founders surveyed reported an improvement in their business skills and half reported that they improved their networking with other firms. In financial terms, the net economic impact of the RGN pilots, in terms of Gross Value Added (GVA), was estimated to be around £16.5 million, with £56.6 million expected over a further three years. And, for every £1 invested by Defra, £1.50 was created in net GVA.

Researcher Anupriya Misra concluded the seminar by suggesting that the rural economy could be improved by following Defra’s evidence and creating a new network of rural enterprise hubs, which provide business skills and support that meets the needs of local communities.


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You may also be interested in Research Online, a valuable resource for research and analysis, covering topics such as entrepreneurship, employment, learning and skills, and careers education. 

‘The great training robbery’ – one year on, is the apprenticeship levy having the desired effect?

It’s now been a full year in operation, but will the apprenticeship levy “incentivise more employers to provide quality apprenticeships” and “transform the lives of young people who secure them”, as the government hopes?

A new report from Reform, which has reviewed the available evidence, suggests that “significant reforms are needed”.

Purpose of the levy

Unveiled in 2015 as part of the government’s commitment to deliver three million apprenticeship starts by 2020, the apprenticeship levy aims to encourage employers to invest in apprenticeship programmes and raise additional funds to improve the quality and quantity of apprenticeships.

The levy mandates that employers in England with annual wage bills of over £3 million pay a tax of 0.5%, which can then be spent on apprenticeship training. Employers pay their levy contributions via the PAYE system into a digital account held by HM Revenue and Customs (HMRC). Smaller employers can also access the funds generated through the levy, but they must pay a ‘co-investment’ of 10% towards the cost of the training.

According to the 2015 Spending review and Autumn statement, the levy was expected to raise £3 billion per annum by 2019/20. However, the evidence reviewed by Reform suggests the levy is instead leading to unintended consequences.

Lower quality apprenticeships and bureaucratic burden?

The number of apprenticeship starts following the introduction of the levy has continued to fall. Reform highlights that the number of people starting an apprenticeship in the six months after it was introduced was over 40% lower than the same period the previous year. The most recent figures are little improved – in December 2017 there were 16,700 apprenticeship starts compared to 21,600 in December 2016.

Reform also found that younger and less experienced people have been particularly badly affected with the focus now being towards Higher and Degree level apprenticeships. And many apprenticeships are now for low-skilled, low-wage jobs or for re-labelled management programmes and do not meet the original definition of an apprenticeship, thus diminishing the quality.

The OCED recently highlighted the importance of maintaining skilled roles in apprenticeships, noting that:

“In the long run, even just a small proportion of low-quality apprenticeships can damage the overall reputation and “brand” of apprenticeships.”

Skills, Knowledge, Abilities

The use of the levy to re-badge existing training courses as a way to shift the costs onto government is a particular concern. A CIPD survey of more than 1000 organisations in January 2018 found that:

  • 46% of levy-paying employers think the it will encourage their organisation to rebadge current training in order to claim back their allowance
  • 40% of levy-paying employers said it will make little or no difference to the amount of training they offer
  • 35% of employers will be more likely to offer apprenticeships to existing employees instead of new recruits

Commenting on the findings, skills adviser at the CIPD, Lizzie Crowley, said “this is not adding any additional value and is creating a lot of additional bureaucracy and cost.

Reform argues that the impact on the public finances of allowing employers to re-label courses in this way should not be underestimated. It is estimated that inappropriately labelled ‘apprenticeships’ represent 37% of the people training towards any apprenticeship standard – a figure that could become even higher if employers are allowed to continue to rebadge training as they see fit.

If current trends continue, the government could be spending almost £600 million per annum by 2019-20 on training courses that have been incorrectly labelled ‘apprenticeships’.

stacked pounds shutterstock_66808108

Concerns have also consistently been raised over the complexity of the levy for employers. It has been claimed that the slump in apprenticeship starts could be blamed on “a combination of confusion surrounding the Apprenticeship Levy and the ‘increased administrative burden’ it placed on employers”. The Reform report highlights that the substantial increase in bureaucracy, among other issues, has led business groups to brand the levy ‘disastrous’, ‘confusing’ and ‘broken’.

Despite this, however, there is still support for the levy. A recent survey by the Chartered Management Institute (CMI) of over 1,500 managers found that two-thirds (63%) agree that it is needed to increase employer investment in skills. It has been suggested that employers have ‘fundamentally failed’ to prepare for the levy as the scale of the challenge was not recognised. And a lack of clarity from the government has also been attributed some blame.

Way forward

The evidence would suggest there is potential for the levy but not in its current form.

The Reform report recommends six significant changes if the objectives for funding apprenticeships are to be realised:

  • there should be a renewed focus on quality over quantity
  • a new internationally-benchmarked definition of an ‘apprenticeship’ should be introduced
  • the 10% employer co-investment requirement should be removed
  • a simpler ‘apprenticeship voucher’ model should replace the existing HMRC digital payment system
  • all apprenticeship standards and end-point assessments should be assigned a fixed cost
  • Ofqual should be made the only option for quality assuring the end-point assessments to maintain standards

If the necessary changes are made, the Reform report concludes that “apprentices, taxpayers and employers across the country stand to benefit for many years to come.”


If you enjoyed reading this, you may be interested in our other posts on diversity in apprenticeships and higher apprenticeships.

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